While
there are several ways of classifying accounting theories, a useful frame of
reference is to classify theories according to prediction levels. Three major
levels of theory are as follows:
there are several ways of classifying accounting theories, a useful frame of
reference is to classify theories according to prediction levels. Three major
levels of theory are as follows:
1. Theories which attempt to explain
current accounting practices and predict how accounts would report specific
events. These theories relate to the structure of the data collection process
and financial reporting (syntactical theories).
current accounting practices and predict how accounts would report specific
events. These theories relate to the structure of the data collection process
and financial reporting (syntactical theories).
2. Theories which concentrate on the
relationship between a phenomenon (object or even, and the term or symbol
representing it. These can be referred to as interpretational (semantical)
theories.
relationship between a phenomenon (object or even, and the term or symbol
representing it. These can be referred to as interpretational (semantical)
theories.
3. Theories that emphasis the behavioral
or decision – oriented effects of accounting reports and statements. These are
referred to as behavioral (pragmatic) theories.
or decision – oriented effects of accounting reports and statements. These are
referred to as behavioral (pragmatic) theories.
